Comcast gets big tax break that was designed for Google Fiber

http://arstechnica.com/business/2016/03/oregon-lawmakers-accidentally-gave-comcast-a-big-tax-break/

by pavornyoh • 10 years ago

123 74 10 years ago

Why shouldn't all service providers benefit from the tax break? Is it ethical to give a tax break that unfairly gives one corporation a competitive advantage against another?

bksenior• 10 years ago

Not sure you read the article. Comcast as expected created a new tier of service to qualify that was grossly expensive. They abused the system and the intent to spur investment in infrastructure was sidestepped.

RealCasually• 10 years ago

I was expecting to see a far higher figure. 2Gbps for $300 is certainly high, but not a joke in and of itself. What was the main intention of this law? If it was to spur higher bandwidth connections, it did so. If it was to lower costs, it seems obvious there should have been a cost factor to the law.

mikeash2• 10 years ago

I have a hard time seeing this as "abuse." If the people who wrote this law were so completely stupid that they didn't even specify a price requirement, well, what did they think was going to happen?

What's more, $300 for 2Gbps is not bad at all. It's not super cheap like Google's offering, but it's about what Verizon charges for 500Mbps, for example.

I propose an alternate headline: "Oregon legislators attempt to spur investment, fail to think through legislation, accidentally grant tax break to incumbent."

newman314• 10 years ago

They should have at least tied it to usage numbers of said tier.

This is monumentally stupid as they not only have no firm commitment from Google, furthermore they are losing money now because of the tax break.

<tinhat> One almost wonders if this was what Comcast wanted in the first place via lobbying. If so, that's quite some submarining.

envy2• 10 years ago

grossly expensive

I'm not one to defend Comcast, but $300/month for 2Gbps fiber is NOT "grossly expensive." It's the exact same product (minus SLA) they sell business customers for thousands. I'm paying $210 a month for gigabit-that-isn't from a WISP, and would jump at the chance to pay Comcast instead.

chimeracoder• 10 years ago

Why shouldn't all service providers benefit from the tax break? Is it ethical to give a tax break that unfairly gives one corporation a competitive advantage against another?

Agreed, though I think this is a case of the headline being misleading. The issue is that the tax break is being provided to a company that's doing no actual investment in fiber or providing fiber at an affordable consumer price (which is what the tax break was intended to encourage).

In other words, the lawmakers didn't think this one through properly. That, or they knew exactly what they were doing, and Comcast lent a hand.

ikeboy5• 10 years ago

Comcast is investing in fiber https://business.comcast.com/docs/default-source/press-relea...

existencebox• 10 years ago

I agree with your sentiment, and as much as it leaves a bad taste in my mouth, the action taken thus far does seem correct.

I'd focus my gaze on the legislators who wrote a tax break with holes so large you could drive a metaphorical truck through; frankly this is an issue (badly written tax and other code that allows sophisticated parties take advantage of the system in a way that wasn't semantically intended even if it is literally permissible) FAR more broad than just this one instance, and underpins a lot of the discussion I've seen on here lately.

JoshTriplett• 10 years ago

The law should absolutely apply equally to everyone. However, given the purpose of the law, it should have been written along the lines of "offering gigabit Internet service for less than $100/month". Because gigabit Internet access has been possible for a long time, if you paid enough; the innovation is making it available to everyone.

enraged_camel• 10 years ago

It may not have been legal for them to set a price cap.

That said, I'm absolutely convinced that all laws must be written with the assumption that someone will try to abuse them, and after a law is written, a completely separate and independent group should "audit" it to find flaws/loopholes and fix them. Basically, treat it like security: never trust the user (i.e. the people and entities who must follow the law).

mhurron• 10 years ago

The only issue I can see with it is this part -

"But the rule change didn't specify that companies have to offer gigabit service at any particular price in order to qualify for the tax break"

The idea for the tax break was to bring affordable high speed to the state whereas Comcast is qualifying by offering anything but 'Comcast's 2Gbps service costs $300 per month, with $1,000 in startup fees.'

naveen99• 10 years ago

comcast doesn't always deploy gigabit even to people willing to pay the $300 / month (like me). Don't know anyone in houston who has been able to get it successfully. Does anyone actually have comcast gigabit anywhere ?

finnn• 10 years ago

The idea is that service providers that provide gigabit internet benefit, as an incentive to build out gigabit internet. So Comcast offers gigabit internet (actually 2 gbps) at an outrageous price, just so they can qualify for the tax break. While the article says it's meant for Google Fiber, it is clearly for any provider who wants to start providing fast internet to people. This would all be fine if the tax break was for companies providing gigabit internet for under a certain price.

omarforgotpwd2• 10 years ago

Would the law really be better if the government set a certain price? Sounds like a lot of hassle to determine what a "fair" price is and keep it updated over time. The price for gigabit will certainly go down over time.

koolba• 10 years ago

Why shouldn't all service providers benefit from the tax break? Is it ethical to give a tax break that unfairly gives one corporation a competitive advantage against another?

They should. As the law is written there's nothing wrong with what Comcast is doing. There's no shame in taking advantage of tax breaks, whether by a large heartless corporation, a different large heartless corporation, or a small time individual.

The answer to this isn't to rail on Comcast for taking advantage of tax breaks. It's to get lawmakers to fix the law by adding a price cap or equivalent on it so it has its intended purpose.

st3v3r4• 10 years ago

In general, you're probably right. But this is Comcast. I can't seem to imagine getting worked up about them being excluded from something like this after all they've done to fuck consumers.

LordKano• 10 years ago

Since I'm not a resident of that state, I don't know their laws but in my state, we regularly give competitive advantage to one company over another.

Municipalities restrict which companies can offer cable TV service within their boundaries based on which company is willing to pay the most money for the privilege of doing business there.

Cheezmeister• 10 years ago

Lawmaker logic astounds me. If they wanted to spur fiber laying in Oregon, why not (wait for it) incentivize fiber laying in Oregon. Nah, let's just introduce a wacky indirect property tax loophole.

qaq• 10 years ago

It's very logical "someone" payed for this loophole to exist in exactly this form.

ocdtrekkie2• 10 years ago

Another article on this actually mentions a bit more detail about the tax break, and the hilarity that ensued. They built the tax break specifically for Google, so Google would build there. Problem is... the law they wrote excluded Google.

So they had to go back and REWRITE the law, to ensure Google, the company they made the break for, qualified for it. And then they're getting upset another provider is trying to get the advantage they wrote for Google to use.

When tax laws are being written specifically for a company, our government has a problem.

Sauce: http://www.oregonlive.com/silicon-forest/index.ssf/2016/02/o...

toomuchtodo5• 10 years ago

When tax laws are being written specifically for a company, our government has a problem.

The government could've pursued the alternative: build out municipal broadband, and allow anyone to provide you service (competitively) at the CO/meetup room. But that's "socialism!"

The problem is not government. The problem is apathetic, uneducated, uninvolved knee jerk voters. And voters get what that deserve for being so.

trjordan• 10 years ago

Because then some construction company would lay fiber and not hook it up. Or hook it up, but put a 10/100 switch on the other end. Or hook it up, but throttle everything coming through it. Or ...

They're incentivizing "offering a service", and it's better for that to come as a discount on existing revenue rather than free money.

rayiner3• 10 years ago

The link in the very first paragraph of the article explains what's going on: http://arstechnica.com/business/2015/04/oregon-changes-tax-r....

The bill, signed yesterday by Gov. Kate Brown, "exempts 'gigabit' Internet service like Google's from a thorny property tax that dates to the 1970s and was originally intended for microwave towers," The Oregonian reported. Until the change, there was "an unusual Oregon tax methodology that values companies based—in part—on 'intangible' assets such as the value of their brands.
Oregon's first attempt to change the rule backfired, when Google told lawmakers that proposed legislation would only provide relief temporarily and that "after a certain time period tax rates would return to approximately double what they are in other states." Lawmakers said they would change the bill to address Google's concerns, and they did.
Portland has approved a Google Fiber franchise "that exempts the company from some of the fees and service requirements Comcast faces" and "reworked transportation regulations to allow Google Fiber to put 200 utility cabinets along big city streets," The Oregonian article said.

The intention wasn't to create a general incentive for laying fiber in Oregon. The purpose was to get rid of a weird property tax quirk that was standing in the way of getting Google Fiber to Portland.

jsprogrammer• 10 years ago

Occasionally, an industry insider may write a bill, email it to the legislator as a .doc, and then it gets voted on and becomes law.

jeremyt3• 10 years ago

For the life of me, and for this exact reason, I can't understand the net neutrality movement.

It's a bunch of people arguing that we have a problem and the most likely party to fix it is the government.

But this article is an example of exactly what the government does when you give them power to control things. They write in loopholes, pork, or they just flat out do a half assed job of drafting legislation. And then we see the deluge of unintended consequences

Wake up, People! The government is not here to fix your problems.

pachydermic• 10 years ago

Wake up, People! The government is not here to fix your problems.

And private firms with monopoly power aren't either.

jMyles3• 10 years ago

Well, to use the current example, the monopoly can be broken with buildouts of wireless mesh networking.

By contrast, government intervention might well make wireless mesh networking, as a methodology for reconstructing the internet, far less plausible.

jeremyt3• 10 years ago

Private firms with monopoly power never last, unless that monopoly power is augmented by the government.

The Comcast "monopoly" is in the process of falling apart, on one side from Netflix, Amazon, and Hulu and on the other side from Google fiber, 5G wireless, mesh networking, and perhaps even the Elon musk LEO satellite Internet plan.

st3v3r4• 10 years ago

"For the life of me, and for this exact reason, I can't understand the net neutrality movement."

We don't want a company deciding what we can and cannot view on the internet.

"It's a bunch of people arguing that we have a problem and the most likely party to fix it is the government."

They're the only party with enough power to do so.

"But this article is an example of exactly what the government does when you give them power to control things. They write in loopholes, pork, or they just flat out do a half assed job of drafting legislation. And then we see the deluge of unintended consequences"

And Comcast is blameless in this? Are they not run by adults, who know exactly what they're doing, and can take responsibility for their actions?

"Wake up, People! The government is not here to fix your problems."

Actually, that's kinda their entire purpose for existing.

ck22• 10 years ago

WTF does even Google need a tax break.

We've got to stop corporate welfare in this country, it is getting carried away.

Google can certainly compete against a $300/mo monopoly.

skykooler• 10 years ago

It's to encourage Google to build their gigabit service in that area first, rather than elsewhere in the US.

ck22• 10 years ago

If they are giving them taxpayer money, what is the savings then?

Basically everyone is funding it for the percentage of them that will actually use it.

How about telling google, we'll guarantee X $$$ of account from low income people that we'll fund, instead of just throwing them free money for nothing.

dantillberg• 10 years ago

I'm actually quite surprised to read that Comcast's offering is symmetrical: 2Gps upstream and downstream. According to http://www.xfinity.com/multi-gig-offers: "Will this be a symmetrical 2 Gbps service? Yes it will be symmetrical: Up to 2 gig download and up to 2 gig upload speeds."

rconti• 10 years ago

I'd be more than happy to pay for this if it was available in the Bay Area! Instead I pay, what, 1/3 the cost for 1/40 the bandwidth?

shostack3• 10 years ago

Is there any good reading on why it isn't in the Bay Area yet? I think Google and Comcast both know a large % of the population here would switch overnight. I'm assuming there's weird laws that prevent progress like most of our other issues out here.

HillaryBriss• 10 years ago

Corporation B has stolen the tax break the impartial government created specifically for corporation A!!!

Oh God, why is this happening!? Where is the justice for this foul crime against man and nature!?

manav• 10 years ago

Comcast residential Gigabit service is basically the same as their Enterprise Metro-E product rather than GPON with Google Fiber, hence the higher cost/install fees. Comcast gives a 10 Gbe fiber hand off at the home.

There's no reason Comcast shouldn't benefit from it.

ikeboy5• 10 years ago

Reminds me of http://dealbreaker.com/2013/07/electricity-market-rules-were...

FERC built a terrible box, and the box had some buttons that were labeled “push here for money,” and JPMorgan pushed them and got money. You can understand the category mistake very easily:
FERC thought the box was for generating electricity at market prices but with a robust backup system to ensure reliable supply, and
JPMorgan thought the box was for dispensing money.
It’s a perfectly understandable mistake to make if you have spent your career building and operating boxes that dispense money, as JPMorgan global commodities head Blythe Masters has. What else could the box be for?

shostack3• 10 years ago

That was a really interesting read, but I'm not familiar with a lot of the terminology so it was a bit hard to follow. Any chance you might be able to explain a bit more of what was happening there?

I get that they found a loophole that rewarded them for producing more of the less efficient energy, but I'm a bit unclear on what the actual rules were, the roles of the various players in this, and how the transactions were taking place.

ikeboy5• 10 years ago

The rules say that they choose the best rate that satisfies demand, then pays all accepted bids that rate.

But bids change over time, and you can't just buy one hour's energy: plants take time to "boot up" which have costs. So they pay in 3 hour increments. If your bid for time t is accepted, they pay you for t,t+1, and t+2.

JPMorgan set prices at {Good price, outrageous price, outragous price}

JPMorgan got an average of 2/3*outrageous price, which made them an obscene amount of profit.

The stupid system didn't notice.

As I understand it the players submit bids to a central computer that decides who to order from.

Comcast gets big tax break that was designed for Google Fiber

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